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By Rajendra Jadhav
MUMBAI Oct 28 (Reuters) – Tokyo rubber futures, which set the tone for tyre-grade prices, are likely to trade in a tight 10-yen range this week due to steps taken by rubber-producing countries to support farmers, dealers and analysts said.
Among other soft commodities, Vietnamese robusta prices are likely to increase their discount to London prices. Thai raw sugar discounts are also expected to rise to New York futures as mills are eager to trim stocks before the start of new season.
Cocoa butter could edge lower as concerns over supply disruption due to Ebola have eased.
The new benchmark Tokyo Commodity Exchange rubber contract for April delivery was trading at 198.2 yen per kg by 0911 GMT.
“This week we are expecting trading in a tight band of 190 to 200 yen,” said Gu Jiong, an analyst at Yutaka Shoji Co in Tokyo.
“Producing countries like Thailand are giving incentives to farmers. This is supporting prices. At lower level, 190 yen is emerging as a crucial support level.”
Thailand’s government earlier this month announced a series of measures to support rubber farmers reeling from a slump in global prices to five-year lows.
The steps announced include nearly $1 billion to finance rubber purchases by the state-run Rubber Estate Organisation, which oversees stockpiles in the world’s biggest producer and exporter of the commodity.
Tokyo futures have risen nearly 14 percent since plunging earlier this month to 173.8 yen, the lowest in more than five years.
However, a further fall in crude oil prices could depress rubber prices, dealers said. Natural rubber and crude oil, a base product to make synthetic rubber, normally rise and fall in tandem.
Brent crude extended its decline to a third day, dropping towards $85 a barrel on Tuesday, still under pressure from a Goldman Sachs report that slashed the investment bank’s oil price forecasts amid a global supply glut.
In the sugar market, Thai dealers are likely to offer high polarisation raw sugar at higher discounts to New York futures as mills wanted to trim inventory before the new season.
“The depreciation of Brazilian currency has been putting pressure on Thai sellers,” said a Singapore-based dealer.
March ICE raw sugar futures fell 0.35 cent, or 2.1 percent on Monday, to settle at 16.03 cents a lb, after falling to a 3-1/2 week low of 15.91 cents a lb as the real fell to its weakest level since December 2008. (Editing by Anand Basu)
